The Naira soared after the Central Bank of Nigeria granted banks and other financial institutions the freedom to trade forex at market-determined rates.
NAN reports that the local currency dropped by 40.78 per cent when compared with N471.67 it exchanged for the dollar on Tuesday.
Also read: Naira scarcity: NLC Poised for showdown with FG, CBN
The depreciation followed the directive by the Central Bank of Nigeria (CBN) to banks to remove the rate cap on the Naira at the Investors’ and Exporters’ Window.
The directive would allow for a free flow of the nation’s currency against the dollar and other global currencies.
The open indicative rate stood at N473.83 to the dollar on Wednesday.
An exchange rate of N791 to the dollar was the highest rate recorded within the day’s trading before it settled at N664.04.
The Naira sold for as low as 461 to the dollar within the day’s trading.
A total of 193.33 million dollars was traded at the official Investors and Exporters window on Wednesday.
Meanwhile, Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research, University of Lagos, said the CBN directive for a free flow of the Naira was a good development.
“The CBN decision is a good development, hoping that unnecessary arbitrage (round-tripping) would be eliminated from the market.
“We expect that the foreign exchange rate will trend downwards when foreign capital inflow increases, following from these.
“The negative side is that many assets or foreign sectors related to Naira prices, like external debt, among others, will be adjusted upwards with some minimal effects on inflation.
“Inflationary effects may not be much, given that many economic agents had been sourcing for their foreign exchange at the parallel market before now,” he said.
